Do You Need to File For Bankruptcy? Here are a Few Facts You Need to Know

Chapter 7 bankruptcy information

Did you know that nearly half, 43 percent to be exact, of American families spend more than they earn each year?
Though you might not think so based on the media, filing Chapter 7 bankruptcy will not erase your debts. You should keep in mind that filing for bankruptcy is not to be used lightly. In spite of the fact that civil judgments, wage garnishments and liens are generally stopped by filing Chapter 7 bankruptcy, it is really a last resort that you should talk to a bankruptcy attorney about before you decide to file. Here are a few important facts that you need to know before you make the big decision of whether or not to file.

Bankruptcy is a legal status of a person or other entity that cannot repay the debts it owes to creditors. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor. Bankruptcy is not the only legal status that an insolvent person or other entity may have, and the term bankruptcy is therefore not a synonym for insolvency. In some countries, including the United Kingdom, bankruptcy is limited to individuals, and other forms of insolvency proceedings (such as liquidation and administration) are applied to companies. In the United States, bankruptcy is applied more broadly to formal insolvency proceedings.

Did you know that in Ancient Greece, bankruptcy did not exist? If a man owed and he could not pay, he, his wife, and children or servants were forced into debt slavery until the creditor recouped losses through their physical labour. Many city states in ancient Greece limited debt slavery to a period of five years. Though debt slaves had protection of life and limb that regular slaves did not enjoy servants of the debtor could be retained beyond that deadline by the creditor and were often forced to serve their new lord for a lifetime. This often took place under significantly harsher conditions.

Though this is not a practice these days, people can often become enslaved to the consequences of filing for bankruptcy. For instance, 84 percent of Michigan bankruptcy filings for the year 2011 were Chapter 7 filings and about 16 percent were for Chapter 13 filings. Though filing Chapter 7 bankruptcy might help you in the short term, you need to seriously weigh the long term effects that filing will have on your life. You credit score will be severely damaged and will take serious and careful work to raise again. You will also have a lot of trouble when it comes to getting loans in the future. If you think that it is your only option, you should hire a financial consultant to make sure that you do it the best way that you can.
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